Drastic increase reported in Oklahoma’s annual ‘questioned costs’ for federal dollars

Oklahoma State Auditor and Inspector Cindy Byrd has released the annual federal single audit report. Her office found $93.4 million of questioned costs in FY 2023. 

“Just to put this in perspective, before the pandemic, Oklahoma’s questioned costs routinely averaged around $5 million dollars per year,” Byrd told reporters during a news conference on Wednesday. “After the pandemic, the average has been closer to around $30 million per year.” 

Last year’s federal single audit reported $29 million in questioned costs. 

Byrd said two agencies, Oklahoma Human Services and Oklahoma Management and Enterprise Services, were responsible for the largest shares of questioned costs. 

She attributed $63.6 million of the total to Human Services and $21.8 million to OMES. 

“Since March 2020, Oklahoma Human Services has received $791 million under the umbrella of the Federal Child Care Development Grant,” Byrd said. “One of the primary purposes of the grant was to help childcare facilities cover normal operation expenses like payroll and rent during the pandemic, ensuring that mandated lockdowns did not result in the permanent closure of daycares in Oklahoma.” 

However, Byrd said Oklahoma Human Services never implemented strong guidelines on how daycares could use the funds, nor did it conduct necessary financial monitoring. 

In some examples, she said at-home daycare owners used the funds to renovate their home kitchens or bathrooms with granite countertops. In another instance, a recipient spent $20,000 to pay off a Cadillac car. 

When she raised those concerns with the federal government, Byrd said she was told any purchase — even those which appear unnecessary — were allowed if it “could be construed as having a remote connection to childcare.” Following the federal government’s advice, she did not formally include the granite countertops or the Cadillac car in the calculated total of questioned costs. 

“At Oklahoma Human Services, our commitment to serving communities is rooted in continuous growth and improvement,” said Jeffrey Cartmell, Director of Oklahoma Human Services in a statement provided to News 9. “We value the financial analysis and review provided by our state partners on these COVID-era childcare programs. Their feedback informs strategic planning and drives program improvements, allowing us to provide top-tier services to Oklahomans.” 

Cartmell was appointed director of the agency in late 2024, which is more than a year after the fiscal year ended for the report Byrd issued on Wednesday. 

OMES was again criticized for its handling of Emergency Rental Assistance funds, which were distributed through a partnership with Communities Foundation of Oklahoma. 

“OMES has made no attempt to recover that excess money and return it to the feds, as the grant required,” Byrd explained. “Meanwhile, the nonprofit was allowed to retain the money and call it a ‘management fee.’ Without any invoices or other documents to justify these costs under the terms of the grant, we had no choice but to question the entire management fee.” 

Byrd said the questioned management fee totaled $15.7 million. She also said the federal government has already requested repayment of nearly $1.6 million in questioned costs associated with the nonprofit’s management fee from FY 2021. 

In a statement to News 9, the nonprofit celebrated its impact of reaching 83,000 households during the pandemic, which shared $334 million in assistance. 

"Throughout the program’s lifecycle, we prioritized compliance, transparency, and accountability while balancing the urgent call to meet community needs in real time,” former executive director Teresa Rose said in a statement. “We remain proud of the impact achieved and of the role we played in bringing vital relief to tens of thousands of households across Oklahoma during a historic time of crisis.” 

The current director of OMES, Rick Rose, was also appointed in late 2024. 

In a statement, OMES also recognized its reach with the Emergency Rental Assistance program but also acknowledged the concerns. 

“OMES has been in regular discussions with the Communities Foundation of Oklahoma and looks forward to resuming those conversations following a recent leadership change,” a spokesperson wrote. “We remain committed to transparency, accountability, and finding the best path forward to ensure Oklahoma continues to deliver programs that serve our citizens effectively while holding those entrusted tax dollars to the high standard expected by Oklahomans.” 

Final copies of the audit report were delivered to Gov. Kevin Stitt and leadership in the Oklahoma House and Senate. A full copy can be read here.